One of the most important choices that the new Italian premier will have to face after political elections on Sunday 25 September it is the appointment of the holder of the department of via XX Settembre, the Minister of Economy who will have the task of guiding the country’s finances through an unprecedented energy crisis and the increase in interest rates.
Markets want someone trustworthy to run a historically weak, high-debt economy. The choice of the new head of the economy will be among the first potentially risky moves for the new government leadership. According to pre-election polls, the center-right has a large advantage to win a majority in both branches of parliament and the leader of the Brothers of Italy, Giorgia Meloni, is the main candidate to lead the future government. Her right-wing coalition includes Matteo Salvini’s League and former Prime Minister Silvio Berlusconi of Forza Italia.
There are many potential candidates with the main option being to leave the arduous task of continuing the action of the Draghi government in safe and well-regarded hands in Europe. The most obvious option in this case would in theory be to confirm the current Minister of Finance Daniele Franco. Under his leadership, the Italian economy grew by 6.6% in 2021 and deficit levels were kept under control. Draghi personally praised Franco last week, saying he hopes the next government “will have a minister like him,” fueling rumors that Franco may be left in his place to continue to lead the economy.
A welcome choice to the markets would also be that of Fabio Panetta, 63, currently a member of the Executive Board of the European Central Bank. His long career at the Bank of Italy and then the ECB makes him a reliable choice, especially at a time when bond yields are soaring and an open dialogue with the ECB is seen as the key to keeping the economy stable. However, Panetta – who according to some sources would be Meloni’s preferred candidate – could be tempted to avoid a role in the Ministry of Finance and wait for the top seat at the Bank of Italy which will be released next year. The mandate of Ignazio Visco, who has headed the Bank of Italy since 2011, will expire in October 2023.
Another scenario indicated by Bloomberg is to entrust the ministry to a prestigious figure appreciated by international investors. One name that circulates is that of Domenico Siniscalco, 68, former Minister of Finance and General Manager of the Treasury. Or Lorenzo Bini Smaghi, 65, also a former member of the ECB executive committee with a long career at the Bank of Italy, would be equally favored.
Internal choices of the center-right coalition include the appointment of the current Minister of Economic Development, the Northern League Giancarlo Giorgetti55, already considered for the post of finance minister in 2018. Also former finance minister Giulio Tremonti, 75 years old, it’s an option on the table. However, it is considered somewhat controversial considering that with him at the Treasury Italy ended up under speculation with the surge in the spread in 2011 that led to the fall of the Berlusconi government. Another option would see the powerful ministry split in two, with a Ministry of Economy in charge of the budget and a Ministry of Finance in charge of fiscal policy. The two ministries were in Italy until 2001, when they were unified just under Tremonti. In this scenario, Maurizio Leo, 67 years old and with whom Meloni worked for the FdI flat tax proposal, it was indicated as an option for the Minister of Finance.